GTSP II Program Plan and Deliverables

1
The Presidents FutureGen Initiative Ensuring
FutureGens Success
Presented by The Executives of the FutureGen
Industrial Alliance
10 June 2004
2
FutureGen Key Points

• Industry has demonstrated a strong commitment
• The Presidents Initiative is in serious jeopardy
• Lack of Federal funding commitment
• Adverse impact on base coal RD program
• Industry Alliance has developed a funding
  solution
• Use previously appropriated Clean Coal Technology
  funds
• New appropriations flat through FY07
• New appropriations through FY09 below FY04 levels
  inflation
• Stakeholder support
• Significant benefits
• Need Administration commitment to proceed

3
A Strong Industry Commitment

• Aggressive 15-month effort to promote the
  Presidents Initiative including
• Willingness to commit 200M
• Congressional staff briefings and testimony
• Worked closely with House and Senate
  Appropriations Committees
• Extensive interactions with Administration
  officials
• Outreach to foreign governments/industry
• Numerous public presentations to States,
  industry, and NGOs
• Alliance has strongly supported the Presidents
  Initiative, even in the face of the budget
  uncertainties
• However, this is not sustainable without
  Administration support

4
The Presidents Initiative is in JeopardyThreats

• Up-front Federal Funding Commitment Lacking
• Required for industrial investment
• Minimizes risk of political failure after site
  selection
• 80 Federal cost-share customary DOE accounting
  rules
• Adverse Impact on Coal Research Budget
• Not at the expense of the base coal research
  budget
• Not a replacement for Clean Coal Power Initiative
• These threshold issues were identified in Spring
  2003 and have not been resolved

5
A Funding SolutionTotal Fossil Energy RD Budget

• Previous appropriations
• 237M of Clean Coal Technology funds allocated to
  FutureGen
• New appropriations in addition to previous
  appropriations
• 673M/yr FY05-FY07
• 723M/yr FY08-FY09
• Stakeholder support
• Politically acceptable
• Technically achievable
• Financially prudent

6
A Funding SolutionTotal Fossil Energy RD
Budget FY05-FY09
5.0B What Experts Say Should be Invested
Presidents Initiative Dead
3.6B Business-As-Usual Based on FY04 Levels
3.5B We Can Make It Work
2.6B OMB Guidance
New Appropriations
Committed to FG
At Risk
Previously Appropriated Funds
0.237B
0.237B
0.237B
7
Benefits of the Solution

• Presidents FutureGen Initiative moves forward
  expeditiously
• State outreach
• Positive message on jobs, coal, and the
  environment
• Presidents 2B Clean Coal Technology commitment
  viewed as fulfilled from industrys viewpoint
• Presidents Hydrogen and Clear Skies Initiatives
  supported
• Solution is politically viable

8
Need Administration Commitment

• New FY06 and out-year budget guidance to DOE
• Update out-year OMB projections
• Incorporate this solution into the SAP on the
  Senate and House Interior Appropriations Bills
• Personal follow-up with Senate and House
  Leadership

9
Back-Up Slides
a Presentation by The Executives of the
FutureGen Industrial Alliance
10 June 2004
10
A Funding SolutionWe Can Make it Work
237M balance allocated to FutureGen in FY05, in
addition to Fossil Energy RD funds outlined
above

• Clean Coal Technology Account
• (previously appropriated balance 237M)

Rescinded
11
A Funding SolutionWhat Experts Say Should be
Invested

• FutureGen is one part of the fossil-based energy
  system
• Prioritizing RD requires an understanding of the
  complete role of coal
• DOE-EPRI-Coal Utilization Research Council
  Roadmap
• Identifies RD and demonstrations required
• Establishes performance metrics
• Total investment required to complete coal
  roadmap 12B(a) of which industry will invest
  4.5B.
• A FY05-FY09 Total Fossil Energy RD Budget of
  5B(b) is required to sustain such an investment
  in the coal roadmap.

• Includes version 1 roadmap sequestration
  roadmap
• Total Fossil Energy RD Budget. Assumes all
  non-coal programs are adequately funded.
• Includes coal roadmap investment
  of 600M/yr 280M/yr in other FE programs.
  Assumes 2/yr inflation.

12
Coal and FutureGen

• Coal is central to a strong US economy
• 80,000 direct jobs
• Coal is the backbone of the US electricity system
• More than 300 GW of installed coal-fired capacity
• More than 51 of US electricity is coal-fired
• Coal is secure
• 250 years of domestic supply
• Relatively low price volatility
• Relatively insulated from physical security
  threats
• FutureGen advances the technology necessary to
• Maintain affordable, coal-fueled electricity
• Fuel a hydrogen transportation infrastructure
• Manage the potential risks associated with
  environmental issues

13
FutureGen Industrial AllianceMembers

• Charter Members
• American Electric Power
• Cinergy Corp.
• CONSOL Energy Inc.
• Kennecott Energy Company
• PacifiCorp/ScottishPower
• Characteristics
• 45 of U.S. Coal Production
• 20 Coal-Fueled Electricity Production
• Operations in 30 States
• Represent all major coal types
• Broad stakeholder engagement

• Peabody Energy
• RAG American Coal Holding, Inc.
• Southern Co.
• The North American Coal Company
• TXU

States w/operations